20160929 Zero net profit from Temasek’s overseas investments?

Any company which has grown at Temasek’s phenomenal rate should be making increasing profits. Temasek isn’t.

1. In FY 2007, Temasek’s revenue and total profit were $74.6 billion and $13 billion respectively. Nine years later, although revenue has increased to $101.5 billion, total profit fell to $12.6 billion.

2. In FY 2008, net profit doubled to $18 billion. Question: Was there a massive sale of state assets which contributed to the profit spike? Some clarification needed here.

3. For profit to spike 100% ($9 bil to $18 bil) in FY 2008 and plunging 66% ($18 bil to $6 bil) the following year, the only conclusion is Temasek must have taken excessive investment risks. Stable businesses and non-speculative investment do not produce such volatile, see-saw returns.

This repeated 2 years ago when profit increased $2 billion in FY2015 but fell $5 billion in FY2016. And we are not even in the midst of a financial crisis.

4. FY 2016 net profit of $8 billion is the third lowest during the decade. Almost all local GLCs are profitable and the total net profit of 5 largest Singapore companies** already amounted to some $6.2 billion. Including all other GLCs, total net profit should have easily amounted close to $8 billion. Doesn’t this suggest the net profit of all its foreign investments is negligible or close to zero? Or are there billion-dollar losses in unlisted GLCs?

5. How could profits to be lower/stagnant when its portfolio value has increased from $164 billion to $242 billion? Are unlisted assets properly valued?

Would appreciate a proper clarification, ie not selective disclosure, from Temasek.

**5 largest companies – Singtel (51%), DBS (30%) , PSA, STT and S Power (100%)

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